The US president's former lawyer Michael Cohen has reached a plea bargain with federal prosecutors in New York, according to US media outlets.
Mr Cohen, 51, has been appearing at a federal court in Manhattan since 4pm local time (9pm BST) on Tuesday.
When asked by the judge if he plans to plead guilty, the president's former lawyer replied: "Yes, sir."
He has agreed to plead guilty to five counts of tax fraud and one count of making false statements to a financial institution.
Mr Cohen is also faces charges of making an excessive campaign contribution.
If a plea agreement has been reached it raises the possibility that Mr Cohen will provide information to special counsel Robert Mueller's Russia probe.
CNN has reported that the plea deal includes prison time for the president's long-time fixer, with Fox News suggesting he will be handed a three to five-year jail term.
Mr Cohen played a behind-the-scenes role in making hush payments to women who claimed to have had affairs with Mr Trump.
This includes former Playboy model Karen McDougal, who received $150,000, and the porn actress Stormy Daniels, who got $130,000.
Mr Cohen was part of Mr Trump's inner circle for more than a decade, working as his personal attorney at the Trump Organization and continuing to advise the president after the 2016 election.
His guilty plea has avoided a high profile trial, but a deal could require him to co-operate with the probe into whether the Trump campaign colluded with Russia in its efforts to sway the 2016 US presidential election.
Neither prosecutors in Manhattan nor Mr Cohen's attorney have commented on the matter.
Mr Cohen was seen leaving his apartment on Tuesday before travelling to the Manhattan offices of one of his lawyers, former federal prosecutor Guy Petrillo, and going into a building where the FBI has its New York offices.
Both Cohen's lawyers and the US Attorney's office declined comment on Tuesday.
The development has come a day after prosecutors signalled that Mr Cohen could be charged before the end of the month.
The case has been a distraction for the White House with the midterm elections approaching.
Prosecutors had been investigating Mr Cohen for possible fraud related to his businesses for months.
The FBI raided his hotel room, home and office on 9 April, seizing more than 4 million items.
The April FBI raids provoked an immediate reaction from Mr Trump, who asked a judge to block prosecutors from reviewing the materials they had seized, citing attorney-client privilege.
The effort was unsuccessful.
Mr Cohen first attracted national attention when Ms Daniels, whose real name is Stephanie Clifford, said he paid her the $130,000 shortly before the November 2016 election to keep quiet about a 2006 sexual encounter with Mr Trump.
Mr Cohen has clashed in court repeatedly with Daniels and her lawyer, Michael Avenatti.
Under US election law, campaign contributions, defined as things of value given to a campaign in order to influence an election, must be disclosed.
A payment intended to silence allegations of an affair just before an election could constitute a campaign contribution, some experts have said.
A number of Mr Cohen's financial dealings since Mr Trump's January 2017 inauguration have become public.
Swiss drugmaker Novartis AG has said it had paid Cohen nearly $1.2 million in a consulting deal.
US telecommunications company AT&T Inc said it made payments of $600,000, and South Korea's Korea Aerospace Industries Ltd said it hired him for $150,000.
Critics have said the payments may have been attempts to buy influence with the president.
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Mr Cohen also received $500,000 from Columbus Nova LLC, a New York company linked to Russian businessman Viktor Vekselberg.
The firm has said the transaction had nothing to do with Vekselberg.
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